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2018 Mid-Year Review – A minefield of deception

The TTWhistleblower today begins an analysis of the Keith Rowley Administration’s 2018 Budget Mid-Year Review, paying particular attention to the claims by Finance Minister Colm Imbert that Trinidad and Tobago has ‘turned a corner’.

The Standing Finance Committee of Parliament met on Tuesday 08 May 2018 to discuss how the 2018 budget would be supplemented and varied in expenditure. Debate on the almost $800 million in changes took place two days later.

Today, we examine and analyse the claims emerging from the debate.

‘GOSPEL’ ACCORDING TO IMBERT

When Finance Minister Colm Imbert delivered the $50.5 billion 2018 budget last October, few could have expected the veritable minefield of deception that would follow in its mid-year review.

If we are to believe Imbert, in just a few months, Trinidad and Tobago turned a corner, severe decline and instability have been halted, growth is being forecast, the happy days are here again.

This coming from a Finance Minister who took almost $1billion of capital spending allocations to plough into recurrent spending.

Imbert told the House of Representatives: “After a long and discouraging period of economic decline, we are now witnessing a welcome upturn. Early estimates are indicative of a growth forecast of 2.0 percent in 2018 and 2.2 percent in 2019, rising to 2.5 percent in 2020.”

“And contrary to the negative commentary of uniformed spokespersons, who speak without having any facts, the turnaround is being driven by economic expansion in both the energy and non-energy sectors.”

But this was just the start of Imbert’s wild distortions!

He went on to say: “Madam Speaker, with average gas production at significantly higher levels, up 20% from the 2016 levels, we have revitalized the energy sector.”

“This boost in production is due to the hard work of a dedicated team led by the Honorable Prime Minister and including the Minister in the Office of the Attorney General and Office of the Prime Minister and the Minister of Energy and Energy Industries.”

Worse is that after Imbert misrepresented economic facts, he accused others of distorting the truth.

Voices of reason that have been guiding the nation’s understanding of the PNM Administered economic challenges came under fire with Imbert identifying UWI economist Dr Roger Hosein, former MP Indera Sagewan-Alli, former PNM Finance minister Mariano Browne, former Congress of the People (COP) senator Patrick Watson and economist Marla Dukharan.

Imbert claimed each person named was biased.

That such claims and personal attacks could have been allowed into Parliamentary record, and the Parliamentary Opposition allowed it to pass without raining the facts down on the Finance Minister is perhaps even more shameful.

And at least one major business organisation, the Couva/Pt Lisas Chamber of Commerce (CPLCC) said the Mid-Year Review “was simple politicking.”

ENERGY RECOVERY

We will examine his claims on the energy sector first, before exploring the facts of the non-energy sector.

According to Imbert, increasing production volumes are being driven by enhanced activities among major oil and gas upstream producers.

It is as if Imbert believes, or would have the nation believe, that between 2015 and 2018, major energy deals in deep water reserves were negotiated, confirmed, mobilized, drilled and brought to production.

Imbert failed, or deliberately neglected to say that every single producer that is now tapping into new oil and gas reserves and increasing their production is as a result of deals negotiated and confirmed by the previous People’s Partnership Administration.

Central Bank figures point to the influx of Foreign Direct Investment in the 2012 to 2013 period of almost US$3.2 billion. Direct Investment in 2012 stood at US$2.093 billion and in 2013, US$1.192 billion.

These were largely energy investments and partly the result of new trade deals.

Imbert also failed, or deliberately neglected to say that increased production and the resulting increased revenue do not translate to growth.

Imbert’s list, however, provides a clear insight into the level of energy restoration work done between 2010 and 2015, the benefits of which are now being seen.

BP Trinidad and Tobago (BPTT)

· Juniper is fully on production;

· Angelin is to come on production in 4th quarter 2019;

· Cassia gas compression project will be in operation in 2020;

· TROC project would come to an end in 2021;

· Exploration drilling would be taking place in the period 2019-2021; and

· Future field developments would be taking place from 2023 and beyond.

EOG Resources Inc (EOGR)

· Exploration and Development drilling would begin in 2019

Shell Trinidad & Tobago Limited (SHELL)

· Drilling in Starfish is in progress with expected first gas in 3rd quarter 2018;

· Development drilling in Dolphin field will commence in 2nd quarter 2018; and

· Block 5c (Bounty and Endeavour) development would commence in 2022

BHP Billiton Ltd. (BHP)

· Gas supply would be maintained to NGC at 340 mmscf/d for next two (2) years; and

· Development of Block 3a is expected in 2023

Trinidad and Tobago as a gas-based, oil producing economy has been in the business of energy for over a century.

On taking office, the former People’s Partnership Administration pursued an aggressive programme of restoring the energy sector which major oil and gas producers had, to then, refused to invest in on account of an uncompetitive fiscal regime.

Despite fluctuations in oil and gas production over the last century, a considerable decline that started in 2005, under Imbert’s former PNM Administration saw oil production slide from 145,000 barrels per day, to under 100,000 barrels per day in 2010.

As oil production declined, it was during that period of the PNM Government that Petrotrin was almost obliterated by billions of dollars in failed investments, negotiated by former Executive Chairman, the late Malcolm Jones, Keith Rowley’s good friend.

By 2010, natural gas production stood at 4,329.5 million cubic feet per day and by 2014, 4,069.3 million cubic feet per day. Because of supply curtailments due to required maintenance works, gas-based industry felt a pinch in their need for natural gas.

Knowing that these maintenance works would affect industry, the previous Government aggressively pursued new exploration deals with major gas producers, including bpTT and those deals were negotiated and confirmed during the 2010 to 2015 period.

These deals also came through a series of successful bidrounds and the advent of deep sea exploration by this country’s first successful deep water bidround.

Increasing oil and natural gas production will now mean for Trinidad and Tobago increased revenues, particularly as more gas means more supply and production from the Petro-Chemicals sector.

WHAT IS GROWTH?

One wonders, however, whether Imbert has equated revenue expansion due to increased energy production with actual economic growth.

Higher energy prices and increased energy output because of the deals that the People’s Partnership Government negotiated and delivered…is not growth.

It just means we remain an unstable economy selling our goods in higher quantities and at higher prices.

Growth will come from how we use the revenue we get, not simply from getting more revenue!

It is interesting to note that Imbert spoke on the issue of jobs just ONCE in his entire charade of a contribution during the 2018 budget mid-year review.

More than that, Imbert did not or perhaps could not justify his empty claim of recovery by definitively saying:

· That the small business sector is in recovery and regaining confidence through investments in expansion;

· That jobs are being created;

· That Foreign Direct Investment is on the up;

· That Medium and Large business are pursuing expansion programmes;

· That capital expenditure is inspiring economic activity;

· That the Construction Sector is recovering;

· That more people are undertaking home expansions and building;

· That people feel safe investing in saving and investment instruments;

· That Foreign Exchange Reserves are recovering from a precipitous fall of three months of import cover in two years;

· That business, investor and consumer confidence are increasing.

So far, readers will see that the Mid-Year review of the 2018 budget amounted to a deliberately orchestrated con-job on the people of Trinidad and Tobago, facts borne out by the Central Bank of Trinidad and Tobago.

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In the next of this series, the TTWhistleblower will examine the non-energy sector, showing that the combined sector was declining as recently as March of this year, and questioning whether Imbert’s ‘recovery’ took place in just two months.

As the truth of our economic predicament sets in, readers may find it useful to look back at previous budgets since 2001.

One will easily note that in a nine-year period up to 2010, national budgets increased by over 300%, and while this happened, oil and gas production declined, there were drastic declines in drilling, negligible diversification, foreign investment plunged, and the State was plagued by over-budget mega projects.

In the years 2011 to 2015, national budgets increased by approximately 26% in spite of non-boom oil and gas prices, with increases in oil and gas exploration and new investments, as well as completed and delivered large-scale projects.